Indian branded apparel retail: Promising but not big enough

Indian brands certainly have global aspirations but fail to address tastes of a global audience. A lot of our apparel brands design keeping in mind the Indian consumer and what would sell in India.
Apparel Industry

International brands including Zara, H&M, Mango, Guess, GAP etc. have made deep inroads in the Indian apparel market. Indian consumers increasingly prefer these brands for their perceived quality, fit and style. On the contrary, Indian brands, such as Fab India, W, BIBA, AND, Allen Solly, Van Heusen etc., which have been quite successful in the domestic market have failed to replicate a similar fan following in the global arena. Though these brands have wowed international buyers, we do not see them becoming mainstream everyday wear in global fashion hubs like New York, Paris and Milan.

Zara’s journey from a small local Spanish brand to achieving a fashion icon status is a perfect case study on how apparel brands can achieve global success. It pioneered the 'fast fashion' concept and now has 2,000+ stores worldwide with deliveries arriving every two weeks! It was Zara’s astounding success that former LVMH fashion director, Daniel Piette, called the company, "possibly the most innovative and devastating retailer in the world" way back in 2001. A nimble and agile infrastructure, essential for the brand to exercise complete control over its entire supply chain, enables Zara to react quickly to new trends. It is the world’s favourite high fashion brand because of its ability to customize collections right to the city and store level. As a result, Zara has catapulted to become the world’s largest apparel retailer.

What is happening back home to achieve our global nirvana? A lot of Indian designers have attempted to make their presence felt in the global fashion space. Manish Arora participated in the Hong Kong fashion week in 2000 and collaborated with Reebok in 2001 to launch a limited edition collection - Fish Fry. Ritu Beri, a designer for over 25 years, was the first Asian to head French fashion house - Jean Louis Scherrer in 2002. Ritu Kumar broke in to Paris and New York fashion houses and department stores in the 1970s! Most established designers attempt to enter international markets via international fashion weeks or collaborations with fashion houses / fashion retailers. Indian designers start by designing a collection and then scale up as they gain popularity and demand for their wares increases.Most of the Indian apparel brands that break into the international market are either very high end, exclusive brands or are displayed with an array of brands in large chains like Niemen Marcus or Macys. Even internationally, not many wouldinvest in a $15,000 Rohit Bal outfit. These exclusive outfits form the attire for celebrities at high profile events but are certainly not every day wear or even corporate wear. Brands at retail chains get a great entry point but are unable to make a mark as an independent brand as they get overshadowed.

Why are Indian brands not the showstoppers?
Indian textile majors like Arvind, Raymonds, Bombay Rayon produce and supply high quality fabric to major global brands. In spite of having this unique sourcing edge coupled with the huge availability of raw artisan and design talent, Indian brands have been unable to make a mark on global fashion due to a number of reasons.

Design sensibilities: Indian brands certainly have global aspirations but fail to address tastes of a global audience. A lot of our apparel brands design keeping in mind the Indian consumer and what would sell in India. Indian brands create collections that appeal to either the ethnic Indian consumer or the global well-travelled Indian consumer, or the Indian diaspora. They have not been able to move from a “create to sell” to a “create to brand” mentality. Building a brand which would appeal to a diverse global audience has to incorporate global wear collections rather than just ethnic Indian apparel or just western wear. Taking heed to this point, home grown brand AND offers contemporary western wear for women with an Indian inspiration. The company opened its first international store in 2013.

Access to capital: Designers and brands need huge investments to establish a global presence. Arnaults, PPR’s and Richemonts have helped designers grow across the globe. Investments are needed for brands to penetrate key markets with retail outlets in global fashion capitals. Retail and consumer goods sector together have accounted for a mere 4 per cent of the PE deals in India from 1998 - 2013. Fashion is one of the key investible sectors within retail but remains grossly underinvested. It was only in 2013 that a fashion house (AND) received PE investment! The lack of investment cripples Indian fashion houses and brands. Investment is needed for production, inventory management, technology, marketing and advertising. It is time for the Future Groups, the Arvinds and the Aditya Birlas to invest in showcasing Indian brands to the world.

Presence:To be accepted globally Indian brand need to be available globally and worn globally.BIBA, AND, Global Desi, Ritu Kumar, Ritu Beri etc. have only a handful of independent stores outside the country. On the other hand Guess, Marks & Spencer, Levis etc. each have double digit stores in India. Most of the international brands are located in the high street malls and shopping areas to capture the attention of shoppers. The lack of a storefront on Orchard Road (Singapore), Oxford Street (London), Fifth Avenue (New York), Champs-Elysees (Paris) and the like is the reflectionof the distance that Indian brands are yet to cover.

Global promotion:Most of the glossy fashion magazines have international brands and Indian labels are conspicuously missing. To build a brand, publicity and advertising are essential ingredients. If consumers are not aware of a brand, how can they wear it to the next high-profile event? Bold marketing is essential for a label to make its mark. Till Indian celebrities and socialites, the usual trendsetters, do not glamourize Indian labels, it would be tough to capture the imagination of global audiences.

The road ahead
Brands like Louis Philippe, Van Heusen and Peter England took 10-15 years to get to INR 500 cr. However, they reached INR 1,000 cr in top line in less than five years. Even international brands like Forever 21 and (whichis likely to have crossed INR 500 cr. in FY16), Zara (crossed INR 700 cr. in FY15 within 5 years of its launch in India) have been hugely successful in the burgeoning domestic market. Looking at the massive domestic growth opportunities it is easy to arguethat there may be no need to look beyond borders. As illustrated above, foreign brands are on an expansion spree in India and many more are likely to enter the country. In fact, previously Zegnahas even sold the Nehru jacket and Hermes the saree in India and even in London, a testimony to the potential of the market. Fashion is aspirationaland if Indian brands cannot captivate global shoppers their brand in India is likely to take a beating slowly affecting sales figures.

As disposable income and aspirationsrise, beyond the metros, Indian youth are increasingly looking at spending on branded wear equating that with improved lifestyles. We need our own desi Zara’s and Mangos to stand up to the incumbents.

Authored By: Shweta Jain, Executive Team Member, Aurum Equity Partners LLP

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